Correlation Between Inverse Nasdaq and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Inverse Nasdaq and Invesco Municipal at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Inverse Nasdaq and Invesco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inverse Nasdaq 100 Strategy and Invesco Municipal Income, you can compare the effects of market volatilities on Inverse Nasdaq and Invesco Municipal and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Inverse Nasdaq with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Nasdaq and Invesco Municipal.
Diversification Opportunities for Inverse Nasdaq and Invesco Municipal
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Inverse and Invesco is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Nasdaq 100 Strategy and Invesco Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Municipal Income and Inverse Nasdaq is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Inverse Nasdaq 100 Strategy are associated (or correlated) with Invesco Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Municipal Income has no effect on the direction of Inverse Nasdaq i.e., Inverse Nasdaq and Invesco Municipal go up and down completely randomly.
Pair Corralation between Inverse Nasdaq and Invesco Municipal
Assuming the 90 days horizon Inverse Nasdaq 100 Strategy is expected to generate 3.16 times more return on investment than Invesco Municipal. However, Inverse Nasdaq is 3.16 times more volatile than Invesco Municipal Income. It trades about 0.05 of its potential returns per unit of risk. Invesco Municipal Income is currently generating about -0.04 per unit of risk. If you would invest 1,066 in Inverse Nasdaq 100 Strategy on October 21, 2024 and sell it today you would earn a total of 12.00 from holding Inverse Nasdaq 100 Strategy or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inverse Nasdaq 100 Strategy vs. Invesco Municipal Income
Performance |
| Timeline |
| Inverse Nasdaq 100 |
| Invesco Municipal Income |
Inverse Nasdaq and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inverse Nasdaq and Invesco Municipal
The main advantage of trading using opposite Inverse Nasdaq and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Nasdaq position performs unexpectedly, Invesco Municipal can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Invesco Municipal will offset losses from the drop in Invesco Municipal's long position.| Inverse Nasdaq vs. Pabrai Wagons Institutional | Inverse Nasdaq vs. Vy Franklin Income | Inverse Nasdaq vs. Boyd Watterson Limited | Inverse Nasdaq vs. Ab E Opportunities |
| Invesco Municipal vs. Catalystmillburn Hedge Strategy | Invesco Municipal vs. Saat Defensive Strategy | Invesco Municipal vs. Virtus Multi Strategy Target | Invesco Municipal vs. Inverse Nasdaq 100 Strategy |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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